EUR/USD Moves Higher Ahead Of Euro Area Inflation Data

Euro Gains Ground Against U.S. Dollar

EUR/USD is currently trying to settle above 1.1330 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is testing the support level near the 20 EMA at the 96 level. If the U.S. Dollar Index manages to settle back below this level, it will head towards the 50 EMA at 95.85, which will be bullish for EUR/USD.

Today, foreign exchange market traders will focus on the final reading of Euro Area Inflation Rate reports for January. Analysts expect that Euro Area Inflation Rate increased by 0.3% month-over-month in January. On a year-over-year basis, Inflation Rate is projected to grow by 5.1%. Core Inflation Rate is expected to increase by 2.3% year-over-year.

Traders will also keep an eye on the developments in the U.S. government bond markets. The yield of 2-year Treasuries is currently trying to settle above yearly highs at the 1.64% level. In case this attempt is successful, it will gain additional upside momentum, which may provide more support to the American currency.

Technical Analysis

EUR/USD managed to settle back above 1.1300 and is testing the resistance level at 1.1330. If EUR/USD settles above this level, it will get to the test of the next resistance level, which is located near the 50 EMA and the 20 EMA at 1.1350.

In case EUR/USD climbs back above the resistance at 1.1350, it will head towards the next resistance level at 1.1370. A move above this level will push EUR/USD towards the resistance at 1.1390. If EUR/USD gets above 1.1390, it will continue its rebound and head towards the resistance level at 1.1420.

On the support side, EUR/USD needs to settle back below the support at 1.1330 to have a chance to gain downside momentum in the near term. The next support level for EUR/USD is located at 1.1300.

A successful test of the support at 1.1300 will lead to the test of the next support at 1.1285. If EUR/USD declines below this level, it will head towards the next support level at 1.1270.

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